The Tennessee Valley Authority is raising what data centers pay for electricity as demand from the industry continues to grow across the region.
TVA’s board approved a separate rate class for data centers last Thursday in Memphis. The change takes effect Oct. 1 for both new and existing facilities and will be phased in over three fiscal years.
TVA Chief Financial Officer Tom Rice told directors the average billing impact is expected to be about 10%.
The change could have a noticeable effect in North Alabama, where TVA supplies power to Huntsville Utilities and other local systems. Google operates a data center campus in Bridgeport on the former Widows Creek coal plant site, while Meta and DC BLOX have facilities in Huntsville.
Data centers accounted for nearly 20% of TVA’s industrial load last year. Former TVA CEO Don Moul said earlier this year that share could double by 2030.
Rice said the new rate is intended to make sure the costs of serving large data center loads are not passed along to residential and other customers.
The new rate moves data centers out of TVA’s manufacturing class and puts them into four categories based on contract demand.
New or expanding data centers with loads above 5 megawatts will also face a capacity commitment charge of about $1.5 million per megawatt, paid over three to five years.
The issue drew little discussion from TVA directors. Randy Jones of Guntersville asked Rice to highlight TVA’s support for the White House Ratepayer Protection Pledge, which TVA signed last month.
“As AI and advanced industries consume more electricity, TVA’s Board is making sure that hardworking American families and small businesses aren’t left carrying the cost,” TVA Board Chair Mitch Graves said after the vote.
Google announced in June that it would spend another $1.5 billion on its Jackson County campus through 2027 and cover the cost of its power and infrastructure.
Huntsville Utilities CEO Wes Kelley told the Huntsville City Council earlier this year that data centers accounted for about 1% of TVA’s industrial demand six years ago. Kelley has also said Huntsville will not use incentives to recruit data centers.
U.S. Sen. Tommy Tuberville made a similar point last week during a visit to Auburn’s new lab at Cummings Research Park. He said Alabama has about 20 data centers, with roughly 10 more potentially on the way.
“If you don’t have a contract for the power, you don’t get one anyway,” Tuberville said.
The same TVA meeting also approved the utility’s long-range power plan and a fiscal 2027 budget that includes more than $13 billion in generation and transmission work through fiscal 2029.
Residential rates were not changed.
For customers in Huntsville, Scottsboro and elsewhere across North Alabama, the amount ultimately appearing on a power bill will still be determined by the local utility.
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